What must the auditor evaluate regarding accounting policies used by Engel & Volkers?

According to Engel & Volkers's 2025 Franchise Disclosure Document, the auditor must evaluate the appropriateness of the accounting policies used by the company. This evaluation is a standard part of an audit performed in accordance with generally accepted auditing standards. The auditor also assesses the reasonableness of significant accounting estimates made by the management of Engel & Volkers, as well as the overall presentation of the consolidated financial statements.

This evaluation ensures that Engel & Volkers's financial statements are presented fairly and in accordance with accounting principles generally accepted in the United States of America. By evaluating the appropriateness of accounting policies, the auditor verifies that the methods used by Engel & Volkers are suitable for their business and industry, and that they are applied consistently. This is important for maintaining the integrity and reliability of the financial information provided to stakeholders, including potential franchisees.

The auditor's responsibilities extend to identifying and assessing the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. They also obtain an understanding of internal control relevant to the audit to design appropriate audit procedures. However, the auditor does not express an opinion on the effectiveness of Engel & Volkers's internal control. The auditor's objective is to provide reasonable assurance that the financial statements are free from material misstatement, allowing potential franchisees to make informed decisions based on reliable financial data.